Kenya Pipeline boosts State coffers with Sh5b dividend payout

Kenya Pipeline Company Acting Managing Director Joe Sang gives his remarks during the Kenya Pipeline volleyball appreciation breakfast after being crowned the National League Champions at Boma Hotel in Nairobi on February 2, 2023. [Kelly Ayodi, Standard]

The Kenya Pipeline Company (KPC) on Wednesday paid an interim dividend of Sh5 billion to the National Treasury for the financial year ended June 2023.

The dividend payment follows a 21 per cent increment in KPC’s profitability to Sh7.6 billion in the financial year 2022/2023 compared to Sh6.3 billion the previous year. Treasury Cabinet Secretary Prof Njuguna Ndung’u noted KPC is among the State entities paying out the highest dividend to taxpayers.

“Most parastatals are still dependent on the National Government for their operations. This means that taxpayers have to incur an additional burden in supporting and bailing them out due to poor performance,” said Prof Ndung’u when he received the cheque in Nairobi.

“It is, however, noteworthy that KPC continues to deliver positive results on an annual basis and remains a self-funded corporation that delivers a return on investment to its shareholders who are the people of Kenya.

The Sh5 billion in interim dividends is the highest dividend paid by any State corporation.”

The dividend payout translates into about 65 per cent of KPC’s profit but falls short of the 80 per cent of the profit that the company will be required to pay to the Treasury. 

Implement the directive

President William Ruto Tuesday directed all profitable State corporations to remit 80 per cent of their profit to Treasury, adding that the government would give further directions as to how the corporations would use the remaining 20 per cent.  KPC said it has a dividend policy of paying 30 per cent of its profit after tax but noted it had consistently surpassed the threshold.

This is likely to change now, as State agencies implement the directive issued by Ruto for parastatals to pay to the Treasury 80 per cent of their profit. 

Cumulatively, KPC said it has paid Sh46 billion in dividends to the government over the last six years. Also speaking at the cheque handover, Energy and Petroleum Cabinet Secretary Davis Chirchir urged the company to continue its product diversification path to play a bigger role in both Kenya and the region. 

“KPC must continue to diversify its product offering while expanding its reach beyond our borders. Fuel security is a critical driver of the economy and that is why the government continues to invest in KPC by entrusting it with key assets,” he said.

KPC Board Chairman Faith Bett-Boinett said the Sh5 billion interim dividend was passed at a recently held annual general meeting. She added that the company is on a firm footing, helped by sound business fundamentals.